The dramatic spike in company insolvencies in England & Wales is the start, not the peak, of more business fatalities, with many âsleepwalking into a train crashâ under growing financial pressure, according to a leading UK insolvency practitioner.
Latest statistics released by The Insolvency Service show the annual rate of company insolvencies in England & Wales is now the highest it has been in eight years.
In the 12 months to August, a total of 20,512 insolvencies were registered with the Insolvency Service. This is 16% more than any 12-month period since 2019 and 26% higher than any calendar year between 2014-2018.
The number of company insolvencies reported by the Insolvency Service for August was down 9% from the peak in March 2022. But analysis by R3, the trade association for UK insolvency and restructuring professionals, shows the upward trend in the 12 monthly rolling numbers, which started in April 2021, has continued to rise at the same steady pace, and is now 72% higher than a year ago.
Meghan Andrews, Insolvency Partner at Azets UK, predicts this upward trend will continue and is urging business owners to be proactive, with the true impact of the global economic crisis yet to be felt. She says businesses have significantly more options available if they are alert to danger and consult early.
Andrews said: âThe current economic environment, characterised by rising prices and tighter financial conditions, is impacting companiesâ ability to service debt. Economists believe it is a case of âwhenâ not âifâ the UK eventually falls into recession. And it is highly likely that the cost of business will increase, especially for companies that have taken out non-fixed rate loans.
âMany businesses relied on loans to cope throughout the pandemic, and consecutive interest rate hikes have come at a critical time for many who are already struggling to stay afloat. The mini-budget contained some good news for businesses but these support measures are futile if the cost of borrowing keeps increasing.â
